Africa Coronavirus Economy Energy Fuel Gas Natural Resources

Global LNG sector faces depressed demand and falling prices

The global liquefied natural gas (LNG) sector has been hit by supply overhang followed by COVID-19-induced economic slowdown and lower demand worldwide.

British Petroleum has pushed the timeline for its Tortue FLNG project from 2020 to 2023 in response to the COVID-19 impact.

Haseeb Ahmed, oil and gas analyst at GlobalData, commented, “Due to the sharp fall in oil prices, spread between oil-indexed long-term LNG contracts and spot contracts have considerably reduced. This can make it challenging for LNG producers to meet their revenue targets. In addition, a rapid decline in gas demand is affecting financing of capital-intensive new liquefaction projects, leading to inordinate delays and capex reductions.”

To keep a check on spends, several operators are delaying their upcoming LNG projects. Operators are reducing their expenditures for 2020 as a measure to counter the impacts of COVID-19. Woodside Energy and Exxon Mobil have resorted to downsizing their capex by 60 per cent and 30 per cent, respectively, for 2020.

Source: OilReviewAfrica via CrudeMix

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